Kiana Nakagawa
May 2015
Adobe Systems, Inc.
Strategic Audit

Table of Contents:
Overview..............................................1
Corporate Governance........................5
Board of Directors.............................8
Top Management...............................10
External Analysis...............................12
External Forces..................................13
Industry Analysis..............................18
Further Notes.....................................23
Internal Analysis...............................25
Resources............................................27
Functions............................................28
Alternatives........................................33
Autodesk & Beyond..........................45
Implimentation..................................46
Evaluation & Control........................48
Annotated Bibliography....................51

1
Overview
John Warnock and Charles Geschke started
Adobe in 1982. Their universal page description caused a
technological paradigm shift, cutting creatives’ dependence
on commercial printing companies. In this manner, Adobe
broke into the creative software market and derived its first
success by exploiting first-mover advantage and the positive feedback loop1
. Then, in 1999,
Adobe established itself as the leader in visual media software when it overtook competitor,
Quark, in a format war2
. This was accomplished because of Adobe’s strategic move to offer
its format reader–Acrobat Reader– for free which catalyzed the network effect. Since then,
Adobe has been adopted as an industry standard, creating a virtual monopoly over visual,
creative software. Adobe increased the utility and perceived value of its products by bundling
related products: Bridge, Illustrator, InDesign, Photoshop, ImageReady, Version Cue, and
Stock Photos. This essentially locked in customers by increasing customer switching costs;
customers would need to relearn six software programs to do work efficiently if they switched;
even now, there are individual program substitutes, but nothing with across-the-board
compatibility like Adobe.
In 2013, Adobe shifted to “the cloud” and stopped producing shrink-wrapped
software. This transformed its business model and pricing structure. As the current leader,
implementing this disruptive technology has upset Adobe’s customers. Over 26,000 users
signed a petition to eliminate the mandate of the subscription model (Change). Though this
may be a short-term response, a survey conducted by CNET showed that 93% of Adobe users
are looking for alternatives to Adobe’s software.
1 A positive feedback loop happens when network effects start to take hold; wherein the network of com-
plementary products is a primary determinant of the demand for an industry’s product (Jones Hill 233).
2 Format wars are the battles to control the source of differentiation and thus the value that such differen-
tiation can create (Jones Hill 230).
Warnock (Left) & Geschke (Right)

2
The switch created a more predictable income model for Adobe. This move also added
further protection for Adobe. There is not a way to calculate the exact amount of losses, but
Adobe has lost profits from the piracy and illegal ripping of its software. Moving to the cloud
has cut off many of the channels for its programs to be stolen and illegally downloaded.
Plus, “it is better for the company to develop disruptive technology [that] cannibalize[s] its
established sales base than to have the sales base taken away by new entrants” (Jones Hill 255).
Adobe’s mission is to change the world through digital
experiences through the company’s addressed market segments
while: achieving and maintaining an above-average return on investment
for shareholders measured in terms of return on equity, earnings per share,
revenue growth, and operating profit; maintaining or achieving the number
one or two position in addressed market segments in terms of market
share, customer satisfaction, revenue generation, product margin, product
functionality, and technological leadership; treating all employees with
respect and rewarding both group and individual performance that exceeds
commitments and expectations; being a good corporate citizen in the local
and national locations where the company produces, sells, and services its
products.
Revolutionize how the world engages with
ideas and information.

3
Current Position
Adobe had $4.1 billion in sales for 2014 with an operating
income of $4.9 million. Profit margins shrank from 7.2% in 2013 to
6.5% in 2014, which is an even more significant decrease in profits
compared to 2010 – before Adobe switched to the cloud-based
business model – when profit margins were 20.4%.
Adobe’s current strategies have stemmed from its mission
and vision. Adobe is a focused differentiator using an international
strategy13
to push its current growth objectives. CEO Shantanu
Narayen explains Adobe’s current mindset as follows: “Traditionally,
your company gave you a product and your job was to market it –
how to position the brand, messaging and allocating media spend,
for example. The new questions to ask are: Are we thinking broadly
enough about what our product is? How can I bring together the
power of digital marketing to dramatically improve the product
experience?”
Adobe has three business segments:
1. Creative Cloud (18 solutions) – graphic design, video editing,
and web development applications
2. Marketing Cloud (6 solutions) – web analytics solutions: social,
advertising, media optimization, targeting, web experience
management, content management
3. Publishing (9 solutions) – created for authors, instructional designers, and eLearning
3 A global strategy that can be implemented when there are low cost-pressures coupled with low pressures
to localize
Adobe
Systems, Inc.
NASDAQ:ADBE
Flash Facts
Trading:
$77.02 / share
P/E:
126.3
Market Cap:
$38.4 billion
Q1 Earnings:
$1.11 billion
(surpassed target
range, $1.05 - $1.10
billion)
Subscriptions:
28% increase
from Q1 2014
Figures as of May 8, 2015

4
The doubt surrounding whether or not the switch to the cloud was successful seems to have
been put to rest after Adobe
released its 10-K for 2014.
Revenues generated by
subscriptions surpassed
revenues generated by
products.
The future looks promising
for Adobe.
Revenue 2013 2014
Products 2,470,098 1,627,803
$ (000s) Change (872,745) (842,295)
% Change (26.11%) (34.10%)
Subscriptions 1,137,856 2,076,584
$ (000s) Change 464,650 938,728
% Change 69.02% 82.50%
Adobe’s Marketing Cloud has taken off, but its Publishing Cloud has yet to redeem itself after
a recent re-design. Methods to buffer and balance Adobe’s offering-portfolio are mentioned in
the alternatives suggested later in the paper.
63%
33%
4%
REVENUE
STREAMS 2014
65%
30%
5%
REVENUE
STREAMS 2013
Digital
Media
Digital
Marketing
Print &
Publishing

5
Corporate
Governance

6
Adobe, driven by CEO, Shantanu Narayen, has been increasing profits and long-
term profitability by participating in the consolidation trend (via acquisitions) of its
industry; developing new markets through diversification of its business efforts (by getting
into marketing and customer relationship management (CRM) software solutions); and
by securing market share in the creative-solutions software market and taking market
share in the software for CRM market. “Pursuing strategies that maximize the long-term
profitability and profit growth of the company is… generally consistent with satisfying the
claims of various stakeholder groups” (Jones Hill 382).

7
• Stockholders – provided the risk capital for the company and technically have control over
the company via their votes per share
• Board of Directors – a body of 13 elected members who oversee the activities of the
company as the acting “voice” of the stockholders
• Managers – demonstrate leadership and business expertise to ensure the functionality of
employees and the business; Adobe has ten executive-level managers
• Employees – approximately 13,500 individuals who perform the functional level tasks and
include scientists, engineers, sales personnel, customer service representatives, marketers,
financiers, accountants, analysts, writers, consultants, and etc.
• Customers – individuals or organizations who consume Adobe’s services; Adobe is
used by companies in advertising, broadcasting, publishing, financial services, gaming,
government, healthcare, high tech, manufacturing, retail, film / video, scientific research,
telecommunications, education K-12, and higher education
• Suppliers – companies that deal with the inputs or outputs revolving around Adobe’s
software solutions (i.e. Apple for computers and Amazon for cloud hosting)
• Creditors – individuals or institutions to which Adobe owes money
• Government – as a US corporation, Adobe is subject to taxation and regulations by the
U.S. government; as a multinational corporation, Adobe is subject to regulations in the
other countries in which it operates
• General Public – ordinary people in society affected directly and indirectly by the business
of Adobe
External Stakeholders
Internal Stakeholders

8
As an American corporation, Adobe’s bylaws revolve around its
obligations to stockholders, who determine and communicate to C-level
management through the Board of Directors. Adobe has thirteen board
members: three of whom have ties to Adobe, while the remainder have
business external to Adobe. Adobe’s board members bring a diverse array of
input to the company which allows Adobe to keep on top of – and even get
ahead of – external trends.
The board acts a fiduciary for stockholders and aligns interests between
stockholders and managers via appropriate incentives, which are spelled out
in the bylaws. These guidelines promote “transparency and the highest ethical
business practices [including honest and ethical conduct; full, fair, accurate,
timely, and understandable disclosure; and compliance with governmental
laws, rules and regulations], enabling a relationship of trust among Adobe’s
board, management team and stockholders” (Adobe).
Adobe is currently paying the price of investing in future profit growth;
its profitability has slowed due to the change in business plan (led by CEO
Narayen) and the initial investments required for continued development.
This may render some of its stakeholders unhappy or at least wary because
of a shrinking profit margin, but this is seen as a short-term issue that has
not deterred investors and has arguably pleased stockholders because of the
perceived long-term benefits. According to Adobe’s P/E ratio, investors are
willing to pay 126.30 times what each share is earning, meaning stockholders
could capitalize on their stocks for handsome amounts.
Board of Directors
Dr. Charles M. Geschke
Chairman, Co-founder,
Adobe Systems, Inc.
Dr. John E. Warnock
Chairman, Co-founder,
Adobe Systems, Inc.
Shantanu Narayen
President & CEO,
Adobe Systems, Inc.
Amy Banse
Sr. VP, Comcast
Coproration
James E. Daley
Retired, Executive VP,
Electronic Data Systems
Corporation
Dr. Robert Sedgewick
Professor of computer
science, Princeton
University

9
As a U.S. corporation, Adobe files quarterly and annual reports
with the SEC which are prepared according to GAAP and are audited by an
independent and accredited accounting firm, as per U.S. regulation. This
satisfies governmental and creditor claims and assures many of the other
external stakeholders, like suppliers and the general public that Adobe’s
business is legitimate.
Adobe’s executive management team strives to run its business in a
manner that maximizes long-term stockholder interest with the guidance of
Adobe’s Board of Directors.
Robert Burgess
Former Chairman,
Macromedia, Inc.
Michael R. Cannon
Retired, President, Dell
Corporation
Laura Desmond
Global CEO, Starcom
Media Vest Group
Dan Rosenweig
President & CEO,
Chegg.com
Edward W. Barnholt
Retired Chairman,
President, & CEO,
Agilent Technologies
Frank Calderoni
Executive Advisor, Cisco
Kelly Barlow
Partner, ValueAct
Capital

10
Adobe’s executives work to maximize long-term stockholder interests by creating
superior solutions that satisfy old and new customers. This increases profits and allows for
Adobe to offer competitive salaries and compensation to the programmers and personnel who
create and market superior products. This continues cycling onto itself to create the sought-
after, long-term stockholder and stakeholder benefits.
CEO Narayen guided Adobe through dozens of acquisitions, the introduction of a new
business unit (Marketing Cloud), the transition to the cloud, and consequently, a new revenue
model. Changes like these can result in loss of leadership due to shareholder activism – and
there was a brief petition going around to have Narayen removed – but through Narayen’s
management, which called for complete transparency of the shifts and clear communication
about the change in control measurements (focusing on usage over profits), shareholder
worries subsided, and the company’s worth reached an all-time high in April 2015, with a
market cap of $39.55 billion.
Through thoughtful direction and execution of growth strategies– which maintained
transparency–and holding accountability for meeting milestones, the executives have been
able to create value for all of Adobe’s stakeholders.
Top Management

11
Adobe Leaders
-Joined Adobe 1998
-Formerly COO where he
led $3.4 billion acquisition of
Macromedia 2005-Serves on
boards of Pfizer, Inc. and Haas
School of Business, University
of California at Berkeley.
-2009, led $1.8 billion
acquisition of Omniture, Inc.
Shantany Narayen
President & Chief
Executive Officer
Michael Dillon
Senior VP, General
Counsel & Corporate
Secretary
Ann Lewnes
Senior VP & Chief
Marketing Officer
Donna Morris
Senior VP, People &
Places
Matt Thompson
Executive VP,
Worldwide Field
Operations
“Great legal teams thrive on
change.”
-Joined Adobe 2012
-14 years at Sun Microsystems
(prior to acquisition by
Oracle) and served as general
counsel and corporate
secretary from 2004 – 2010
“Great marketing is equal
parts data and creativity.”
-Joined Adobe 2006 from Intel
-Member of the American
Advertising Federation’s Hall
of Achievement
“Our people make Adobe
exceptional.”
-Joined Adobe in 2002
through Accelio acquisition
-Promoted in 2007
-Named a Top 10 Breakaway
HR Leader in 2013 by Evanta
-Formerly a board member of
Second Harvest Food Bank
“Customers inspire us.”
-Joined Adobe 2007
-Member of board of directors
at Appirio and at Special
Olympics Northern California
Mark Garrett
Executive Vice President
& Chief Financial Officer
“Business model innovation
keeps us resilient.”
-Joined Adobe 2007
-Served as SVP and CFO of
EMC’s Software Group
-Sits on board of directors of
Informatica Corp. and Model
N, Inc.
Bryan Lamkin
Senior VP, Technology &
Corporate Development
“We’re inventing the future
through art and science”
-Rejoined Adobe 2013 after
previously serving 1992 – 2006
-Established Adobe’s Creative
Suite and Photoshop
businesses
Gerri Marin-Flickinger
Senior VP & Chief
Information Officer
“IT innovation drives the
business.”
-Joined Adobe 2007 as CIO
and Senior VP
-Former CIO at VeriSign,
Network Associates, McAfee
-Member of Wall Street
Journal CIO Natwork and
Sierra Ventures CIO Advisory
Board
Brad Rencher
Senior VP and GM,
Digital Marketing
“Digital moments are built in
milliseconds.”
-Joined adobe 2009 via
Omniture acquisition
-Promoted to SVP and GM in
2010
David Wadhwani
Senior VP & GM,
Digital Media
“Create with impact.”
-Joined Adobe 2005 through
Macromedia acquisition
-Member of the Fine Arts
Museums’ Board of Trustees

12
External
Analysis

13
Opportunities
There are over 80 million members of the Millennial generation in the U.S. alone (U.S.
Chamber of Commerce Foundation). These digital natives are subject to increasing pressures
for digital literacy. “According to one estimate, as of 2009, advertising-supported Internet
services directly or indirectly employed three million Americans, 1.2 million of whom hold
jobs that did not exist two decades ago” (Department of Commerce). In order to differentiate
in the job market, knowledge of software manipulation, database use, and analytics will be
necessary (Ritz).
The number of start-ups took a dip in 2012, but have been rebounding ever since, with
over 300 million startups every year (Webb). Many of these companies will be going online
and entrepreneurs will be looking for ways to create content and track performance.
Historic preservation is going digital. “With creativity, there are ways to marry
preservation with 21st century comfort and convenience” (Bedard). There are over 35,000
museums in the U.S.; that is more than all the McDonald’s and Starbucks combined
(Ingraham). The masses are becoming more aware of the damage that is caused to historic
sites because of tourism, and sites are trying to find ways to combat the issue without being
subject to negative economic repercussions (Eadington 8).
Spending on software in big emerging markets (Brazil, Russia, India, China: BRIC) is
increasing by as much as 10% each year, as compared to the 2% growth in the U.S., Europe,
and Japan (BSA Software Alliance). Production of software in the BRIC nations is also
increasing, but as these systems are small and primitive, acquisitions and or partnerships with
native publishers could lead to a strong foothold into a country.
Visual effects in media are relying more and more on 3D software, and 3D printing
External Forces

14
looks like it may be the next “big thing”. “The 3D printing market just aggregated an estimated
revenue of 3.3 billion US-dollars worldwide in 2014. That´s over a third more than in the
previous year 2013” (Klarmann). Also, formatting and technical standards in this industry
have yet to be set.
Mobile technology is improving and becoming more accessible, with global revenue
from apps expected to rise by around 62% to $25 billion (Wolonick). This has three
implications: creators need means to produce these applications; advertisements are taking on
a new platform; mobile technology is changing the way users interact with media (i.e. multi-
touch gestures, 3-D designs are more comprehensible, work leaves the desktop). Software
applications are condensing to run on the new, smaller, mobile processors because high-
memory products cannot run efficiently.
This uptake of mobile technology has other consumer consequences that companies
need to be prepared to undertake. With 1.6 billion users worldwide, user expectations for
app performance are increasing. This increases the stakes amongst competition when 30%
of respondents to Kleiner Perkins’s survey said that they would spend more money with an
organization that had a good mobile app (Brauer). Along with increased incentive to produce
superior applications, there is a smaller window of opportunity for companies to prove their
worthiness. With the average person looking at his or her smartphone over 150 times a day,
there are too many things competing for the attention of consumers (Keyes). Attention spans
have shrunk from 12 seconds in 2000 to a mere 8 seconds in 2013 (Keyes). This trend has
been snowballing for decades. In 1976, “[Steve] Jobs knew that consumers did not want to
buy a computer they would have to learn how to use over the course of many months” (Mars).
Apple products are so simple to use today that even babies are able to manipulate them with
precision. Computer scientist, Doug Englebart, noted back in the 1960s (much to his dismay)
that consumer markets prioritized user-friendly devices over learnable devices even if the

15
latter, learnable devices could do more effectively complete a task once mastered (Mars).
Adobe currently offers software in the “learnable” category. There is yet to be a standard
to capture customers on this platform and become the standard for the mobile devices of
creatives, marketers, and publishers.
New advertising methods are needed to effectively exploit mobile platforms and
to evaluate a campaign’s performance. According to Edelman Berland, more than 80% of
marketing professionals are receiving informal digital training and only 29% of respondents
have faith in the measurement approach used to monitor and quantify the effectiveness of
marketing efforts (Konrad). Marketers are gravitating toward software that can consolidate
digital platforms and help customize messages depending on said platforms. These types of
software systems are categorized as Software as a Service (SaaS), and its demand is growing.
According to a study done by Siemer & Associates, 83% of companies either have adopted
or expect to adopt SaaS technologies in the immediate future (Roe). Furthermore, customer
relationship management (CRM) SaaS solutions are the most requested applications across
enterprises worldwide; the global CRM market grew 12.5% between 2011 and 2012, resulting
in an $18 billion industry (Roe).
Whether or not to move to the cloud is a business decision that consumers have
been adopting by default. At first there was a lot of resistance, but now cloud computing is
becoming more accepted and enables SaaS systems to bundle, increasing value and usability.
Cloud computing also enables this type of work to become even more mobile. Projects,
statistics, and tools are no longer anchored to hardware; this circles around again to how
mobile technology is improving and gaining popularity.
The software industry is aging, and there have been trends of consolidation: trends
in which Adobe has been actively participating. Adobe has engaged in more than 12 major
acquisitions in the past five years (Adobe 2014). There are many promising companies that

16
could be bought or taken over.
Threats
Exchange rate fluctuations can have major repercussions for companies that operate
on the global scale. Adobe experienced a loss of $8.2 million in 2014 due to foreign currency
fluctuations and hedges (Adobe 2014). That is a fraction of a percent of Adobe’s total revenue,
but the company should continue to hedge against such losses.
Cyber-criminals and cyber-espionage are advancing and the stakes are growing as
more information is going online. Malicious cyber activity contributes to:
• The loss of intellectual property and business confidential information
• The loss of sensitive business information, including possible stock market manipulation
• Opportunity costs, including service and employment disruptions, and reduced trust for
online activities
• The additional cost of securing networks, insurance, and recovery from cyber attacks
• Reputational damage to the hacked company (McAfee Research Team)
This type of activity leads to $400 billion in annual losses globally (McAfee Research
Team). The actual losses due to piracy and pilferage (inventory shrinkage) are difficult to
estimate, as many companies do not know the extent of their losses.
Competitors and ownerless, open-source contributors are building alternative creative
software solutions. Open-source14
solutions sprout up everywhere and can have significant
impacts on revenues. There are numerous free solutions out there for single Adobe products
with more being introduced and updated every year. These alternatives have the potential
to gain widespread acceptance, jeopardizing the monopolistic hold Adobe has had on the
creative-solution software market. This makes users scruitinize the value they derive from
Adobe’s services and poses a major threat to Adobe’s position.
4 Open-source refers to a source code (what is essentially software) that is freely available and can be
distributed and modified by anyone.

17
Adobe’s business depends on its patents and other intellectual property. Intellectual
property rights differ from country to country. This affects Adobe’s capacity to protect its
products/ services and causes problems with third-party affiliates. This can inhibit growth and
day-to-day business in general. The infringement of copyrighted material results in damaging
losses and can usually only be resolved by going through costly legal channels. One of the
more publicized events for Adobe is its pending lawsuit against Forever 21. Adobe and other
creative-solution software companies filed a lawsuit against the California-based retailer in
January 2015 (Niccolai). Forever 21 denies the allegations and is asking for a trial jury on the
matter (Niccolai).
As mentioned before, there have been trends of consolidation. This is a threat to
small companies as it increases the viability of being acquired, possibly through a hostile
takeover. Adobe is not a small company, but considering how big other players are, even it
must acknowledge this risk. As an example, Apple has more than $155 billion in cash and
could easily buy Adobe (Apple). This acquisition would allow for Apple to fix Flash and have
a superior script running on its products; secure its hold on creatives and creative agencies by
rewriting Adobe to only be compatible with Apple products (locking out computers running
on Linux or Windows); and Apple could drive down Adobe’s prices and secure its monopoly
by making it impossible for competitors to enter this market.

18
Industry Analysis
The global software and services industry is growing at a rate of 5.8%, reaching
a value of $3.0 trillion in 2014 (Market Line 7). It is highly fragmented; the four largest
companies (IBM, Google, Microsoft, and HP), which make up less than 10% of the market,
operate alongside many smaller companies (Market Line 11). The industry is going through
a period of commoditization15
, made evident by trends of mergers and acquisitions (M&A)
and of universal transcriptions (standardized formats / codes) which can make it difficult to
create something “completely new”. This makes it even more challenging for companies to
differentiate when users prefer homogenous end-products because of the network effect and
the guaranteed “compatibility it creates between products and their compliments” (Jones Hill
231).
Software companies maintain a lot of the value with regards to Porter’s Five Forces
Analysis. Software companies license their products / services and variable costs are low.
The first copy of a digital good / service is high, but “[t]he variable costs of software licenses
are close to zero” and, as another property of digital goods, software can be copied easily
without compromising quality
(Bauxmann 19).
Participants in the
software industry realize that they
are partaking in a winner/first-
creator-takes-all market.
5 The process by which the eco-
nomic value of software distinguishes in
terms of attributes (uniqueness) and end
up becoming simple commodities in the
eyes of consumers.

19
Buyer Power: Moderate (buyers are not price sensitive but large buyers exist for these
differentiated products)
• Products are differentiated. There are dozens of companies that able to make billions of
dollars in the industry—without competing on price—because each company is able
to capitalize on specific market segments without interfering with another’s business
(Gartner Research).
• Customers are not highly
price-sensitive (e.g.
Microsoft suite’s online
price is $219.99).
• There is low risk of backward integration: creating software takes a considerable amount of
initial funding and expertise.
• Software is not highly substitutable (the alternative to many software solutions would be to
do things manually, which would be less efficient in terms of time and errors, and be lower
in quality).
• There exists large buyers (multinational companies or government entities) may wield
significant power; if a large client drops a software, revenues could take a huge hit.
However, the cost to service a large corporation (over a small buyer) differs only in service
costs (Bauxmann 19). As indicated previously, the variable costs to reproduce software are
minimal.
• Both large and small firms may serve many small businesses or individuals who have less
bargaining power.
• If there are new / smaller companies, buyers may still go with the name-brand company, as
it reflects a reliable reputation.
• Switching costs are high for four reasons: (1) software is a complex product and
Company Software-type
2013 Revenue
(Billions of $)
Microsoft
Application software: functional-level
systems
65.7
Oracle
Enterprise software: database
management systems
29.6
IBM
Development software: consumer
software and hosting
29.1

20
in switching, one would need to learn how to use the new software, which is time-
consuming; (2) the existing network has compatibilities that may be disrupted and would
need to be fixed, raising the costs involved; (3) there are disruption risks in transferring
data (a necessary step in switching) in which important information may either be lost or
corrupted; and (4) penalty fees may arise from terminating a license contract prematurely.
Supplier Power: Moderate (need experts that cost a lot, but there are numerous suppliers for
other components needed to run software production)
• Hardware suppliers are dependent on the industry. Though there are a limited number of
suppliers – which would usually indicate high supplier power – this is mitigated by the
fact that software is a complementary product to hardware; therefore, the “health” of the
hardware industry is, if not dependent, at least influenced by the software industry. “The
greater the supply of high-quality software applications running on these machines, the
greater the value of personal computers to customers, the greater the demand for PCs [or
Macs], and the greater the profitability of the personal computer industry” (Jones, Hill 60).
• Suppliers of expertise have a lot of power. Software engineers in the US average $75,000
and $90,000 salaries (U.S. News). The average American makes only $35,000 a year
(Durden).
• Suppliers of cloud hosts are increasing (McCue).
• Tangible inputs vary in availability and cost, depending on how specialized the software
engineering is. As a general statement, a computer could be all one needs to develop
software. However, costs for “providing services associated with the software, such as
consulting maintenance, and support” are not negligible and are often overlooked as a key
factor to the success of the software (Buxmann 19).
• Forward integration is not only inhibited by the financial burden of an initial investment
and variable support costs, but by the lack of qualified persons who can supply the

21
expertise (Rothwell).
New Entrants: Moderate (more people are capable of creating software without formal
education, but economies and benefits of scale give existing firms a head over new entrants)
• Technology enables entrepreneurs to easily create web-based and open-source models.
• Larger software companies have economies of scale (Gartner Research).
• Smaller software companies are highly specialized with customized services (Gartner
Research).
• Large companies experience benefits of scale: name recognition / reliability inhibit new
entrant (Porter 3).
• Need to create strong distribution relationships, which may not be particularly easy if a
firm does not have a big name
• Hyper-competition: if a firm cannot adapt / keep up, it will die (a start-up may miss
the new trend developing a solution to something from last week); rapid and dynamic
competition creates seemingly unsustainable advantage.
• Regulation varies drastically in this industry and depends on the nature / sensitivity of the
product / service
• Entry is achievable but M&A’s pose a threat to small companies’ survival
• Switching costs are high, as mentioned before.
• In 2012, seed investment deals in U.S. tech more than tripled to 1,700 from 2009, but there
was an estimated failure rate of 90% (Carroll).
Threat of Substitutes: Low (Software takes the place of doing things manually, but physical
items are now integrating capabilities that minimize the need for software).
• Increased value-added offerings / components that come with complementary products
act as substitutes and could be shrinking the size of a potential market (i.e. some cameras
have immediate image editing capabilities in its operating system and therefore eliminates

22
– or at least lessens – the need for application software).
• Other substitutes for software include doing things “by hand” or using manual input /
computational methods. This is quickly going out of fashion as pressures for efficiency and
usability increase.
Degree of Rivalry: Moderate (differentiation and industry growth results in lack of price
competition)
• Globally, this industry is expected to grow 27.2% over the next four years, reaching a value
of $3.748 trillion (MarketLine 1).
• Industry profit margins were 14.5% in 2014
• This industry group is fragmented, with large incumbents operating alongside smaller
companies, although diverse product portfolios and strong growth help alleviate rivalry
(MarketLine 13).
• There are high initial costs, but low variable costs, as mentioned before.
• Switching costs are high, as mentioned before.
• Diversification of existing companies is growing (via innovation and aforementioned
M&A) – eases pressure (Market Line 13).
• There are no real signs of price-based competition.
• Exaggerated posturing through personalities and egos (i.e. Steve Jobs’s public put-down of
Flash) (Jobs).
Competition is specialized, fragmented, and intense. At this point, Adobe still has
brand-loyal customers, but it should be wary of the fast industry growth rate. In 1999, Adobe
overtook Quark, which had 80% market share at the time, because Adobe innovated more
quickly and stayed on top of trends. If it does not want to lose its crown, Adobe’s managers
need to strengthen its inimitable value proposition to secure competitive advantage and
maintain its hold on the value it has spent over 25 years creating.

23
There exists a “software ecosystem” that contains a set of businesses that interact with
a shared market for software and services and acts as a single unit, underpinned by a common
platform. As an (over-simplified) example, consider the following:
Each level of this ecosystem has different external forces acting upon it: different
consumers, suppliers, substitutes, and new and existing competitors. There are also the
exchanges of information, resources, and artifacts going backward—up the value chain—from
the consumer. In regards to this perspective, understanding where Adobe lies in the value
chain has enabled it to find other opportunities on which to capitalize while creating more
barriers to entry by increasing the value and interconnectivity of its applications, driving up
switching costs for consumers.
Adobe’s production segment is the heart of value-creation for its customers. It uses
innovation to create high-quality software solutions for creatives, marketers, and publishers.
At its position in the larger value chain, Adobe is responsible for content creation (R&D),
content editing (production), and content bundling (marketing). It then transfers the final
services to the network, Amazon: Adobe’s cloud host which acts as the “distributor” in this
value chain. The software then is accessed by the “markets” which are businesses, marketers,
and individuals. There is another section along the value chain that does not interact with the
software but does receive the end results. These end persons or entities consume the products
of the software: websites, advertisements, movies, photos, etc.
Software-type
Platform Personal Computer /Tablet
Operating System MS Windows
Application MS Office
End-User Program MS Excel
Further Notes

24
By stepping back and looking at the larger value chain, Adobe found that it could
provide a solution and add value further forward in the chain: the link between the markets
and end consumers. In 2014, Adobe launched Adobe Marketing Cloud. One section of
Adobe’s actual consumers – marketers – needed more efficient ways to deliver, monitor, and
track the effectiveness of their campaigns across media platforms. As early as 2009, Adobe
began acquiring companies that had analytics software (Adobe). It then encoded these
software solutions to create a set of cohesive and compatible programs that could be bundled
and distributed.
Adobe’s production segment, or content-editing segment, is the center of gravity
around which Adobe’s success and other efforts revolve. It has capitalized on growth
opportunities by applying these competencies to other areas and business models.
Raw
Materials
Content Network Markets
End
Consumer
- computers
- facilities
- labor
*see section
below: Adobe
- hosts
- distributors
-businesses
- other service
providers
- end
consumer or
media content
Content
Acquisition/
Creation
Content
Editing
Content
Bundling
- program writing
/ buying
- formatting
- compatability
- encoding
- Creative Suite
- Marketing Suite
- Publishing
Value Chain for Software:
Component Examples:
Adobe’s Role in theValue Chain:

25
Internal
Analysis

26
Adobe has been a leader for many years with over 43% of the global creative software
market share (Trefis Team). With increasing competition and major external influences,
Adobe has only recently undertaken major restructuring to reverse its weaknesses and amplify
its strengths.
Over 5,000 global companies use Adobe’s products and services; nine out of the top
ten retailers and banks and eight out of the top ten media outlets and auto manufacturers use
Adobe’s products and services (Company Profile: Adobe Systems Incorporated). This shows
that Adobe’s services can be scaled to meet the needs of an individual, freelance graphic
designer or a multinational corporation.
Adobe’s center of gravity lies in its R&D, marketing, and human resources departments
and revolves around producing high-quality, innovative solutions. These distinct competencies
contribute to Adobe’s competitive advantage, but each segment also has aspects that could be
optimized to increase customer responsiveness and efficiency.
The following is a discussion of what Adobe has at its disposal to achieve its vision,
growth objectives, and sustainable competitive advantage.
Quality &
Innovation
Human
Resources
R&DMarketing

27
Resources
Adobe received over 1,000 patents in the past five years (Patexia). The following graph
shows how many patents Adobe (in red) has compared to other tech companies. For its size,
Adobe has a monumental amount of patents in its arsenal.
Adobe’s facilities gained recognition as “Greenest Office in America”, setting the bar
for corporate environmental initiatives (Knox). With 70% of its workspaces LEED certified,
Adobe “assures that [its 13,500]employees breathe clean air, drink safe water, work under
natural light, and enjoy the benefits of innovative and creative workspace design” (Adobe).
This contributes to Adobe’s efficiency, stabilizing long-term costs.
Source: https://www.patexia.com/
Patents held by Adobe in comparison with other digital service providers

28
Functions
Marketing
Adobe is ranked 77th on Interbrand’s “Best Global Brands” (Interbrand). It also has
a massive global network for delivery and customer support (Adobe 2014). Adobe recently
increased its services by adding Adobe Marketing Cloud. This is Adobe’s attempt to address
customer responsiveness by positioning itself as “a single source for a full spectrum of
marketing efforts – from the creation of materials to distribution, management, and even
measurement across platforms” (Interbrand). Adobe also switched from physical products to
a cloud subscription. This change allows for Adobe’s engineers to churn out updates at more
frequent intervals (instead of waiting the usual 12-18 month product cycle) (Narayen).
This switch is also reflective of an entire business model change. Adobe’s products
have become services with a wide array of support options, including access to a library of
how-to videos, customer service via online chats and phone, and other platforms to educate
consumers and marketers about the cloud (Adobe). This increases efficiency for users and
therefore utility, but Adobe lacks strong communication conveying these benefits. A survey
conducted on Adobe users by CNET showed that 93% are looking for alternatives to Adobe’s
software.
By nature, Adobe has a unique cost structure which, combined with a virtual
monopoly, has allowed for it to price its items in the past at a high point. When Adobe
switched to the cloud, it enabled the company to unravel its previous decision to bundle
software to further capitalize on the changing consumer demands.
Adobe has strong strategic alliances. For example, Adobe partnered with Publicis
Group (one of the “Big Four” multinational advertising / PR companies: owns Leo Burnette
and Saatchi & Saatchi) to create the first end-to-end marketing management platform that

29
automates and connects all components of a client’s marketing efforts (Adobe). This improves
efficiency for both Adobe and Adobe’s customers, while also securing a large group of
customers.
Research and Development
“Our researchers look years into the future, giving them the opportunity to explore
innovations well in advance of clearly identified customer needs” (Adobe).
As displayed before, Adobe either acquired or created more than 400 patents in 2014
alone. Adobe’s branch of R&D, called Adobe Research, had ten papers accepted to SIGGRAPH
2014, an annual conference on computer graphics (Adobe). Adobe collaborates with over 50
universities, and over half of its collaborators are published in peer-reviewed conferences and
journals (Adobe). In an environment where growth no longer happens through innovation
but acquisition, Adobe has the resources and capabilities to foster its growth through
innovation.
Adobe’s spending on R&D has consistently made up 27% of operating expenses
over the past three years. Adobe recently launched its “rejuvenated” Publishing Cloud with
the hopes it can balance its portfolio. Q2 reports should show indicators of whether or not
Adobe’s endeavor was successful.
Human Resources
Adobe fosters innovation through its company culture, implementing many programs
to encourage employees to innovate. Adobe recently received press for its Kickbox – literally
a red box in which there are materials to help an employee turn a big idea into a product
(Fortune). Things like this, paired with professional development opportunities, competitive
salaries, and incentives are how Adobe attracts top-tier employees (Adobe). Adobe currently
sits 83rd on Fortune 500’s “Best Companies to Work For” and has been on this list for 14
years. That is not to say that Adobe is not also susceptible to poachers. For example, Chief

30
Technology Officer, Kevin Lynch, left Adobe to spearhead the iWatch project with competitor
Apple (Adobe). There is a constant battle to capture and retain the best scientists, engineers,
and managers, but Adobe has strong programs and incentives in place to stave off the
competition fairly well.
Finance
Adobe’s financial position is a bit confusing to navigate and is riddled with strengths
and weaknesses for the company. Its strong points are its large amounts of cash ($1.1 billion,
2014) and its growing, predictable-income via subscription (up 140% from 2013, beating Wall
Street expectations). Adobe also funds its operations well and had a debt ratio of 37.2% in
2014, on par with the industry average.
Its major financial weaknesses are seen in lower-than-industry-average profit margins
(6.5% in 2014) and ROE (4.0% in 2014). R&D and marketing and sales make up 27% and
53% of operating expenses respectively in 2014 and have been increasing as profit margins
are decreasing. It makes one wonder whether these figures represent optimal efficiency and
returns.
PROFIT MARGIN DEBT RATIO ROE
2010 2011 2012 2013 2014 Industry Average

31
Production
Adobe has superior product / service offerings. It recently has kept pace and, in some
instances, outranked major software players Oracle, IBM, and HP even though Adobe is
dwarfed by their size (market caps in billions: Oracle - $188.9, IBM - $167.5, HP $59). Adobe
is listed as a top vendor for global service quality management and customer experience
management (TechNavio). Only a year after the launch of its Marketing Cloud, Forrester
Research placed Adobe as the leader in Web Content Management, beating out Oracle, IBM
and HP (Schadler). Adobe also sits at the top of Gartner’s Magic Quadrant, outpacing the
“visionary” of this segment, Salesforce.com, with
regards to its strategy and ability to implement it as
a digital marketing hub (Frank). This reflects strong
barriers to imitation regarding intangible assets
and capabilities, adding to Adobe’s competitive
advantage.
The cost of the first copy of a digital good /
service is high, but “[t]he variable costs of software
licenses are close to zero” and, as another property of
digital goods, software can be copied easily without
compromising quality (Bauxmann 19). This is a
generalized strength for the digital goods industry,
mentioned before, and it would be great to see
Adobe capitalizing on this further.
Adobe is dependent on third-party sellers
and it has one host for its cloud computing (Adobe). This value-chain decision leaves Adobe
susceptible to the risks experienced by third-parties.
Source: Forrester Report
Source: Gartner Report

32
Adobe managers have been sentimental and myopic, especially with regards to Flash.
Flash, which became irrelevant on the mobile market back in 2010, is being phased out as a
rich-text platform on the internet (Firefox and Youtube have already transferred away from
Flash in favor of HTML5), and the application is riddled with imperfections that hackers
exploit heavily (Jobs). Yet Adobe pushed Flash for years afterwards, wasting resources and
time. The publicity regarding Flash (via Steve Jobs’s letter) and the lack of response from
Adobe regarding this situation and its security compromise left stakeholders furious. Clearly,
Adobe’s marketing / public relations was not very customer responsive in this instance.
Moreover, it has taken Adobe more than two months to patch the points of hacker-entry in
Flash. After that Adobe needed to release emergency updates three times in two weeks to
patch more zero-day hacks (Adobe). This is not to say that Flash is completely irrelevant. It
is still the top choice for game designers, animators, and those who create other interactive
media.
Customer Service
Adobe’s capacity to respond to customers poses a major weakness, which Adobe
has been trying to correct by the aforementioned changes in business model and service
expansion. According to beta-site, Tech Radar, of the top ten most hated programs of all time,
Adobe has two programs on the list: Flash Player and Adobe Reader (Marshall). Also, Adobe’s
recent business-model shift left many in an uproar; a petition was signed by 26,000 users to
eliminate the mandate of the subscription model (Elst). This probably greatly contributed to
the motivation behind the 93% of users looking for alternatives. To avoid losing customers,
Adobe will need to incorporate methods to convey value into its growth strategy.
So far Adobe has sustained long-term competitive advantage. It started to lose its edge
due to lack of customer responsiveness and current lack of substantial, visible benefits from its
innovations.

33
Alternatives

34
The following are alternative strategies for growth. They are grouped based on area
of focus between new and existing markets, as well as new and existing product offerings.
Each of these recommendations plays on Adobe’s distinct competencies and resources while
capitalizing on external factors and moving Adobe toward its mission.
Adobe should pursue a growth strategy because, as mentioned in the Industry
Analysis, Adobe will competing in a state of hyper-competition.
Market Penetration (Focus: existing markets with existing products)
Alternatives in this section can be implemented on top of other growth strategies. It is
important to secure as much of the market as possible as a high-tech company. Becoming the
standard is how a company ensures long-term competitive advantage, but even after becoming
ubiquitous, a company needs to stay prevalent in consumers’ minds; if not, it risks fading into
the noise.
General Increase in Marketing
Adobe needs to focus on educating its existing users
in regard to the increased utility/ benefits they derive from
having Adobe on the cloud. This will work to secure the
wavering consumer loyalty and ensure customer satisfaction.
The “new users” (users that started using Adobe after its switch to the cloud) do not need
to be reassured, but this marketing effort can only strengthen Adobe’s position with these
subscribers. Another way that Adobe can increase the satisfaction of consumers is to increase
the efforts and highlight the returns being generated from recently acquired Behance (the
leading online platform for the showcasing and discovering of creative work). This is a
Alternative Growth Strategies
“Today it’s important to
be present, be relevant,
and add value.” –
Nick Besbeas, Head of
Marketing, LinkedIn,

35
talent-access point. It brings together businesses and creatives. This type of platform could
strengthen program-loyalty on two fronts: that of users and that of businesses.
To further address businesses, Adobe should also be focusing on educating CMOs
about the superior benefits revolving around the Adobe Marketing Cloud as compared to
those of competitors like salesforce.com. Other promotional activities include sponsoring
marketing tradeshows, conferences, and summits: the types of conferences that corporate-
level, marketing decision-makers attend. This would allow Adobe to target large numbers of
marketing officials, while giving them the space to show how its services are superior to the
competition’s.
Increase Educational Tools to Capture and Secure Existing-Market Shares
Adobe already has more than 40% of the global market share in creative software, but
analysts believe this percentage will prove volatile (Trefis Team). With 93% of Adobe users
looking for alternatives to its software solutions, the security of Adobe’s reign seems unstable
at best (Shankland). If a competing solution were to be released tomorrow, it would be a
serious scramble for Adobe. Young marketers entering the workforce today, along with the
future generations of marketers / creatives, have shorter attention spans (down to 8 seconds in
2013 from 12 seconds in 2000), increasing the preference for usable-solutions over learnable-
solutions (Keyes). Expanding Adobe’s existing library of tutorials (by language and for other
programs) would create a stronger sense of utility in a consumer’s mind, as well as offer
another point for Adobe to drive traffic to its other resources like Behance. It would also allow
Adobe to more punctually convey the more rapid turnover of new benefits: from a 12 to an 18
month product cycles to immediate innovation on any compelling offer (Narayen).
Adobe already has the resources and capabilities to fund, produce, and evaluate this
endeavor. Plus, with regards to the Creative Cloud, much of the content Adobe would need
already exists. It would not even need to create these tools, but simply construct a small series

36
of algorithms to identify which videos on Youtube have the highest hits and rankings on
tutorial-style videos. Adobe could then negotiate with the creator either rights to the video or
hire him or her to reproduce their content as Adobe sees fit.
As for Adobe Marketing Cloud, no educational resources exist yet. Establishing some
would largely benefit customers, as well as Adobe’s top line and usage/subscription rates.
The 57% of marketers who do not have faith in their campaign measurement approaches are
looking for ways to gain confidence in quantifying and categorizing this “big data,” which is
what Adobe Marketing Cloud does (Ramos). The learning resources would enable marketers
to make that leap from “aspiring editor16
” to “content master27
”.
This platform would also serve as another feedback loop for Adobe’s own marketing
(What are consumers stuck on? Is the SaaS’s usability keeping up with its powerful
capabilities?), and reinforce the sense of community customers perceive around the Adobe
brand. Adobe would be helping its customers do their job. This would create massive amounts
of perceived value, which would offer Adobe more pricing flexibility and maybe even boost
profit margins.
Product Development (Focus: existing markets with new products)
Focus in this area would work to increase Adobe’s offerings and secure more of its
existing market share.
Adobe Smart screen / work environment
Adobe recently started producing physical products that complement its software. The
digital pen and ruler increase user-value, enabling a creative individual to get more out of the
Adobe’s products with their existing tablet or touch-screen enabled device.
Adobe could continue creating value in this manner by introducing the new “optimal work
environment” for those who use Adobe’s software. This new optimal work environment
6 “Misguided marketers who lack strategy, but think they understand Content Marketing” (Ramos).
7 “Marketers who incorporate consumer feedback into an evolving strategy and have the technology to
successfully measure the impact of their endeavors on overall revenue” (Ramos).

37
consists of whiteboard-sized smart-screens that allow for interaction and immediate response
across multiple devices through the cloud.
These screens would redefine the workplace and allow for marketers, engineers, and
scientists to interact with their creations as their customers would interact with the products.
Adobe could create a strategic alliance with SHARP. SHARP is the ideal company for this
situation as it would not compromise the existing relationships Adobe has with Apple or
Microsoft (as it would if Adobe tried to go with Samsung). SHARP is also one of the few
companies that focuses on projector-less interactive technology as opposed to projector-
centric boards.
Other Software Solutions: Presenter Applications and Project Management Software
Many of the creatives who use Adobe software use it to complete larger initiatives.
For example, a marketer may use Photoshop to create an advertisement that is part of a larger
campaign or initiative. Adobe created the Marketing Cloud to address the project-needs of
marketers. Adobe could introduce other software that helps manage projects for other market
segments. This would allow Adobe to further capitalize on its acquisitions (i.e. Omniture) by
continuing to apply and exploit its online optimization and analytics segments.
Presentations are used across industries; from a marketer preparing a forecast, to a
manager making a pitch to the board, to an executive unveiling a new strategy. Adobe could
create a presentation program that combines the color pallet capabilities from InDesign,
minor animations from Flash, and the basis for appealing infographics and supportive charts
from Media Optimizer.
These software offerings would expand Adobe’s service portfolio. The fact that it
would be cloud-based – differentiating it from existing software applications – would increase
usability for consumers and allow them to work real-time across devices from anywhere.

38
Video Hosting
This alternative expands upon a few of Adobe’s existing software offerings: Flash and
Premier. Film, animation, and game creators could publish what they produce using Adobe
software on an Adobe platform. Adobe could diversify its revenue sources even further by
allowing for advertisements on this venture.
Adobe holds a spot on Bytelevel Research’s Web Globalization Report Card, which
shows that Adobe has the ability to construct and maintain successful web presences (The
2015 Web Globalization Report Card).
Acquire Autodesk
Rumors have leaked that Adobe is looking to buy The Foundry because of its 3D
software. Bidding for The Foundry starts at £200 million (Armstrong). The Foundry has very
little to offer in the realm of 3D printing, and Adobe would be wasting resources on playing
catch-up to Autodesk.
Autodesk is the leader in 3D software technology and will soon be the leader in 3D
printing technology. It caters to engineers, architects, and other digital hobbyists: similar
segments that Adobe tries to reach. Autodesk also has a 180+ million user-base worldwide
and a product portfolio containing over 100 elements in 17 languages. Autodesk Education
Community has over 150 million members and over 1,900 training centers (Autodesk). Adobe
could apply these resources to address its own weaknesses and mitigate the threats of digital
illiteracy.
The reason Autodesk is not yet the leader in 3D printing is because it has yet to create
the software that can efficiently link up 3D application software to the actual printers (Dove).
This dilemma may sound familiar because it is the exact problem to which Dr. Warnock and
Dr. Geschke devised a solution that started Adobe’s journey to success. They invented desktop
printing, and Adobe has the capabilities and resources to repeat history and revolutionize

39
personal 3D printing. This would very much boost Adobe’s current profits and ensure long-
term sustainable competitive advantage when its becomes the accepted standard.
Adobe would have all of this at its disposal if it were to acquire Autodesk.
Adobe would also be eliminating a massive source of competition in the markets of
architecture, engineering, construction, manufacturing, media, and entertainment. Autodesk
just completed an “acquisition spree” that increased the software solutions for film, animation,
and games in its portfolio mix, encroaching upon Adobe’s territory and threatening its hold
on market share (“Autodesk Continues Acquisition Spree”).
Another opportunity that Autodesk is tapping into – and that, subsequently, Adobe
would have access to if it acquired Autodesk – is reaching a much younger demographic.
Autodesk just partnered with toy manufacturer, Mattel, to launch a 3D platform in which kids
can design and print their own toys (Sawers). Autodesk is securing the loyalty of the future
inventors, engineers, architects, and designers. This could be a massive threat to Adobe’s future
profitability, but merging with Autodesk would turn this threat into a strong, sustainable
competitive advantage point.
Overall, Autodesk is in strong financial health. Autodesk’s 2015 revenues jumped after
a brief decline in 2014, with margins similar to Adobe at 3.26% (Autodesk). It has a market
cap of $13.7 billion and returns on equity of 3.65% (Autodesk). Even though it just went
through its acquisition spree, Autodesk remains stable, with a debt ratio of 33.67% (Autodesk).
Also, Autodesk just completed the same shift to the cloud (and through the same host as
Adobe – Amazon Web Services – which significantly lowers any transitional problems Adobe
might have encountered), and has seen a 28% ($1.16 billion) increase in its deferred revenue
(Autodesk).
Market Development (Focus: new markets and existing products)
Adobe could continue to push its products to other industries (sports and science) or

40
demographics (children) to name a few. Some of these potential markets could handle Adobe’s
products as is, but others would need simplified versions of its current offerings.
Target: Small Businesses and “Average Bloggers”
There are more than 300 million startups annually (Webb). Adobe could expand
its market outside of corporation accounts and specialized designers, expanding to a more
massive collection of businesses and individuals. This would require Adobe to create solutions
that are tailored more to the “common person”.
Adobe could create “lite” versions of its software (creative, marketing, and publishing).
This would decrease the complexity of its products, add another price-point to Adobe’s mix,
and increase the potential number of consumers.
Bonus: This particular alternative has even more long-term potential if Adobe sets
its “lite” version software to be most compatible with content management king, Wordpress.
Wordpress is the most popular blog host, with over 74 million dependent sites and more than
26,000 additions a day in the U.S. (Colao).
Adobe currently offers creation, publishing, and analytics solutions, but does not host
or manage content the way Wordpress does (and does well).
Diversification (Focus: new markets and new products)
Shifting away from the existing offerings and market for Adobe, there seems to be a
plethora of options. Adobe could open an advertising academy; get into film production; start
writing operating system software. Each of these options would require Adobe to either push
innovation from within or gain it through alliances or acquisitions (similar to how it acquired
Omniture and used its resources to start Adobe Marketing Cloud).
Internet-of-things38
8 The network of physical objects or “things” embedded with electronics, software, sensors and connec-
tivity to enable it to achieve greater value and service by exchanging data with the manufacturer, operator and/or
other connected devices. Each thing is uniquely identifiable through its embedded computing system but is able
to interoperate within the existing Internet infrastructure.

41
Adobe could strike up partnerships for projects revolving around internet-of-things.
Adobe would implement its software into the “interface” of the partner’s facility. This would
redefine user experiences wherever it were implemented. For example, imagine being able to
“try on” outfits without the tediousness of looking for matching items, or putting clothes on
and off. Just stand in front of a full body “mirror” that has an overlay of real-time animation-
generating software; drag and drop outfits on you; easily locate or have delivered desired
items; pay before your items are finished being packaged. These experiences can be applied to
homes, restaurants, fitness, and more.
Some options like this already exist (i.e. Warby Parker and its at-home fittings or Chili’s with
its on-table, touch-screen ordering and check-outs), but a preferred standard or model has not
yet arisen.
Granted, this segment is full of “next bests,” and therefore a major rush to be the
“first” is on. Companies with deeper pockets (Google and Apple) are vying for similar
diversification moves. Adobe may be punching above its weight if it tried to pursue some of
these diversification options.
Museum Exhibit Design and Archiving
Adobe’s existing solutions could be applied to creating interactive exhibits and
archiving artifacts. In addition, having items archived could enable the creation of virtual
tours. Virtual tours in themselves have three implications; they lengthen the life of sites /
artifacts by decreasing the wear of direct tourism, decrease art crime because of a proliferation
in databases and track-ability, and increase the reach of museums’ potential market. Imagine
bringing the Louvre to a history class or walking through the Coliseum – as it is today and as
it was in Ancient Rome, thanks to additional simulation – from one’s living room.
Many existing virtual exhibits are already running on Flash (i.e. Sistine Chapel), but a
standard for archiving and exhibit design has yet to be established. Google attempted an

42
endeavor in 2011 called Google Art Project, but it only has 150 collections focused on art
museums (“Google Art Project”).
At physical sites, Adobe could create a hybrid Photoshop-Flash software solution to
create interactive exhibits. This could increase the appeal of certain exhibits as well as offer
another layer of preservation to sites that would otherwise experience a lot of wear from
visitor interaction. Even if Adobe is a forward-thinking company, its mission is to “change the
world through digital experiences,” and it can do so by integrating with historic preservation.
This alternative has quite an extensive potential market, but a short cap on potential
profitability. There are over 35,000 museums in the U.S. and more than 19,000 in Europe
(Ingraham). Of the museums with financial data, only 40% reported annual income of more
than $10,000 on IRS returns (Ingraham). Adobe could become the standard for this market
(similar to how it became the standard in desktop publishing), and go down in history by
preserving history.
Of these alternatives, the acquisition of Autodesk is my ultimate recommendation.
Autodesk will clearly be a major acquisition, but taking the financial hit now will secure
Adobe’s competitive advantage. It would not be the first time Adobe undertook an acquisition
of this magnitude. In 2005, it acquired Macromedia for one-third of its market cap ($15.1
billion, December 2005) at a price of $3.4 billion (Adobe). If Adobe waits, Autodesk’s stock
will just continue to rise, and if Autodesk develops a dominant design of commercial software
to connect its 3D desktop solutions to 3D printers with another company (i.e. Microsoft),
Adobe will be shut out of that market (NASDAQ). Owning the technical standard is key
locking in a company’s competitive advantage in this industry, especially because it would
be capitalizing on first-mover advantage by patenting the software and creating an initial
monopoly.

43
Adobe’s Marketing Cloud is shifting from a star to cash-cow-dom. Spending on this
entity has been declining (down 11% from 2012) and as seen before on page 4, the Marketing
Cloud is increasing as a percent of revenue type for Adobe.
Adobe’s Creative Cloud has been its cash cow for decades and still makes up the
biggest portion of revenues.
Adobe is trying to balance its portfolio by upgrading its Publishing Suite, dragging this
unit out of dog-dom.
Based on this model, Adobe is poised to take on another star. For many industries,
launching another offering may come off as too much risk too soon after a recent offering
addition. In the software industry though, as it was pointed out in the industry analysis, there
is hyper-competition. Acting fast and firmly enables a company to take advantage of first
mover advantages, increasing the likelihood of its formats becoming the standard.
BCG Matrix
Relative Market Share (High to Low)
MarketGrowthRate(LowtoHigh)
Star (High Market Share,
High Growth Rate)
Question Mark (Low Market Share,
High Growth Rate)
Dog (Low Market Share,
Low Growth Rate)
Cash Cow (High Market Share,
Low Growth Rate)

44

45
Autodesk
&
Beyond

46
From now until 2017, Adobe should focus on generating as much cash in-flow as
possible through its existing business units by:
• Increasing learning tools (and subsequently perceived-value) around all of its programs
• Pushing sales of its upgraded Publishing Cloud
• Securing sales through momentum and word-of-mouth of the Marketing Cloud
• Increasing incentives for sales personnel to acquire more accounts and subscriptions
Also during this time, Adobe should complete its $2 billion stock buyback program
(Adobe Systems, Inc.).
As shown previously, Adobe is in good financial standing with a healthy debt ratio. It
also has over $1 billion in cash and cash equivalents at its disposal as of November 28, 2014
(Adobe 2014). The cash on hand is clearly not enough for an acquisition that will be over $13
billion, but Adobe could finance this endeavor by borrowing and / or issuing stock. Adobe’s
strong price-to-earnings ratio gives it a lot of leverage in financing this acquisition using
equity.
By late 2016, Adobe should begin negotiations to acquire Autodesk. The alternatives of
merging and forming a strategic alliance are also available, but Autodesk is one third the size
of Adobe and could be bought before it outpaces Adobe.
Once Autodesk has been acquired, there are many things working in Adobe’s favor to
Implementation
2015 2016
Stabilize & Strengthen
Begin Negotiations

47
ensure a smooth transition of data and of company cultures. Autodesk switched to the cloud
in 2014, meaning its financial model is similar to Adobe’s and would not require adjustments
to Adobe’s current model. Autodesk uses the same cloud host as Adobe – Amazon Web
Services – which also eases the transition of Autodesk’s solutions and data without fear of data
corruption or loss. Adobe just has to lift the metaphorical gate between the two cloud farms.
Adobe’s leadership, specifically CEO Narayen, has guided Adobe through dozens of
acquisitions in his time at the company, including Omniture (which enabled Adobe to launch
its Marketing Cloud) and Macromedia (which gave Adobe Flash and Dreamweaver and
consequently the window to enter the market of the online world). There may be many steps
Adobe can take while merging with Autodesk that were similar in these acquisitions. CEO
Narayen could mimic the successful aspects and apply the optimum controls based on the
Macromedia acquisition: ensure company culture integration by having engineer and scientist
liaisons, create a spot on the board for an Autodesk executive, and highlight the similarities in
the missions to unite the two cultures under the common purpose.
2017 2018
Acquire Autodesk

48
Evaluation & Control
Firstly, Adobe should watch how the market reacts to this new endeavor by tracking
stock prices. Whether it needs to combat negative reactions or support positive ones,
Adobe will need to continue to be transparent with shareholders just as it was throughout
its transition to the cloud. “I think shareholders are incredibly perceptive if you are clear
about where you are headed. If you provide milestones along the way and if you measure
yourself against the milestones so that people have something to calibrate you against, they
understand.” Narayen “while going through [a] transition you have to have fortitude. One
thing companies need to do is be transparent.”
The other benefit of such open communication enables an employee, manager, or
general function to see where and how it contributes to the company’s success and serves as an
immediate feedback loop, lessening the time it takes to correct a situation or confirm success.
This would continue to drive Adobe’s high level of quality and rapid innovation turnover.
Clear communication, objectives, and incentives will also help Adobe maximize its new mass
of engineers while encouraging its current scientists to continue to challenge themselves.
Financial checkpoints that the market and Adobe will be monitoring are increased
profitability and revenue growth. Combining resources and markets with Autodesk will
undoubtedly have overall increases in subscriptions but looking at subscription increases per
business unit will be a major indicator as to the actual performance of this endeavor.
Hopefully combining competencies across such large companies, while simultaneously
tapping into the fast-growing 3D printing market, will drive down costs and increase profit
margins. This would subsequently increase returns, and Adobe will be able to push its ROE
back up to industry standards.
The last party (and arguably the most important) Adobe should be monitoring is its

49
customers. Adobe can accomplish this by watching the unique hits on the videos in its new
education-video library. This would serve as an indicator to Adobe of the new degree to
which it is conveying value. Also keeping tabs on any forums surrounding the videos would
enable the company to deepen relationships and customer intimacy.
Lastly, Adobe should continue to monitor the progress of its customers: awards
and media surrounding consumer-success. After all, what they do would not be possible
without Adobe’s software. Celebrating them increases existing customer intimacy and is an
opportunity to convey Adobe’s value to the skeptics. This should significantly drive down the
93% of formerly disgruntled users.
“I would never
speculate on the
limit. Every time you
speculate, you’re way
too conservative.”
-John Warnock

50

51
Adobe. Adobe: Creative, Marketing, and Document Management Solutions. N.p., n.d. Web.
07 May 2015.
This is the initial window through which the following was explored: corporate social
responsibility, corporate governance, executive profiles, press releases on Adobe’s (re)
actions to external trends, product descriptions, and service offerings.
Adobe Systems, Inc. Form 10-K for the Fiscal Year Ended November 26, 2010. Adobe Systems,
Inc. website. Accessed December 14, 2014.
Use of Adobe’s 10-K forms covered: financials; Adobe’s perceived threats; major
business transactions; performance as divided by financial-model and business unit;
and other insights into Adobe and how it perceives its endeavors.
Adobe Systems, Inc. Form 10-K for the Fiscal Year Ended November 25, 2011. Adobe Systems,
Inc. website. Accessed December 14, 2014.
Use of Adobe’s 10-K forms covered: financials; Adobe’s perceived threats; major
business transactions; performance as divided by financial-model and business unit;
and other insights into Adobe and how it perceives its endeavors.
Adobe Systems, Inc. Form 10-K for the Fiscal Year Ended November 30, 2012. Adobe Systems,
Inc. website. Accessed December 14, 2014.
Use of Adobe’s 10-K forms covered: financials; Adobe’s perceived threats; major
business transactions; performance as divided by financial-model and business unit;
and other insights into Adobe and how it perceives its endeavors.
Adobe Systems, Inc. Form 10-K for the Fiscal Year Ended November 29, 2013. Adobe Systems,
Inc. website. Accessed December 14, 2014.
Use of Adobe’s 10-K forms covered: financials; Adobe’s perceived threats; major
Annotated Bibliography

52
business transactions; performance as divided by financial-model and business unit;
and other insights into Adobe and how it perceives its endeavors.
Adobe Systems, Inc. Form 10-K for the Fiscal Year Ended November 28, 2014. Adobe Systems,
Inc. website. Accessed December 14, 2014.
Use of Adobe’s 10-K forms covered: financials; Adobe’s perceived threats; major
business transactions; performance as divided by financial-model and business unit;
and other insights into Adobe and how it perceives its endeavors.
Adobe Systems, Inc. “Adobe Announces Program to Repurchase $2.0 Billion of Stock by End
of FY2017.”
Adobe Announces Program to Repurchase $2.0 Billion of Stock by End of FY2017.
Adobe, 14 Jan. 2015. Web. 06 May 2015. This is a press release from Adobe announcing
a $2 billion stock buy-back program to be completed in 2017.
“Adobe Systems, Inc.” University of Oregon Investment Group (2009): n. pag. Web. 28 Mar.
2015.
This report is an analysis on Adobe, covering external and external factors while
ranking four competitors relative to Adobe.
Apple, Inc. Form 10-K for the Fiscal Year Ended September, 26 2014. Apple, Inc. website.
Accessed December 14, 2014.
Apple’s 10-K form was used to find more risks related to Adobe. It also provided
numbers that clarify the sheer size difference between the two companies.
Armstrong, Ashley. “Adobe Eyes £200m Bid for British Visual Effects Firm The Foundry.”
The Telegraph. Telegraph Media Group, 25 Apr. 2015. Web. 04 May 2015.
The rumor mill is churning out the possibility of another acquisition by Adobe. The
UK tech company, The Foundry, is looking for a buyer and Adobe needs to boost its
3D software technology.

53
“Autodesk Continues Acquisition Spree, Set to Buy Shotgun - Analyst Blog.” NASDAQ.com.
N.p., 26 June 2014. Web. 04 May 2015.
This article provides more information for the evaluation of Autodesk’s financial health
as well as Autodesk’s current position with regards to Adobe.
Autodesk. “Corporate Info.” Autodesk. Autodesk Corporate Information, 2015. Web. 04 May
2015.
This article provides a concise summation of Autodesk’s current performance and
offerings.
Bedard, Steve. “Historic Preservation Conference to Look at Trends | Concord Monitor.”
Concord Monitor. N.p., 12 Apr. 2015. Web. 07 May 2015.
Bedard believes there is a way to integrate technology and preservation in a manner
that is comfortable to today’s lifestyles.
Brauer, Chris, Dr. “Mobile App Performance Increasingly Critical -- AppDynamics Releases
‘App Attention Span’ Study Which Shows Nearly 90 Percent Surveyed Stopped Using
an App Due to Poor Performance.” AppDynamic. Market Wired, 12 June 2014. Web.
07 May 2015.
These are the published findings of research about user behavior revolving around
the usage of applications. The implications of this research point to potential threats
for a company like Adobe.
BSA Software Alliance. “Software Industry Facts and Figures.” BSA. N.p., 2009. Web. 7 May
2015.
This excerpt contains hard figures describing the software industry in the U.S. and
abroad with respect to the past, present, and future.
Buxmann, Peter, Heiner Diefenbach, and Thomas Hess. The Software Industry: Economic
Principles, Strategies, Perspectives. Berlin: Springer, 2013. Print.

54
This book provided insight to the cost structure and other economic factors of the
software industry. This contributed to the Five Forces Analysis portion of the paper.
Carroll, Rory. “Silicon Valley’s Culture of Failure...and ‘the Walking Dead’ It Leaves Behind.”
The Guardian. N.p., 28 June 2014. Web. 8 May 2015.
This article speaks to how difficult success is in this industry. Large portions of start-
ups fail, with an even larger portion barely making it.
Colao, J. J. “With 60 Million Websites, WordPress Rules The Web. So Where’s The Money?”
Forbes. Forbes Magazine, 2012. Web. 04 May 2015.
This article states some useful statistics about the most popular blog host in the world:
Wordpress.
“Company Profile: Adobe Systems Incorporated.” Market Line (2014): 1-10. Web.
Market Line provided information to conduct a preliminary SWOT analysis on Adobe.
Some stats and figures are used in this paper as supporting evidence.
Department of Commerce. “Fact Sheet: Digital Literacy.” Department of Commerce. N.p., 13
May 2011. Web. 07 May 2015.
This source indicates what are facts (versus fiction) with regards to digital literacy.
Each fact is backed up with substantial data and all of it works to underline the
increasing necessity of digital literacy in order to survive in the modern day.
Dove, Jackie. “Autodesk Goes Full-On Microsoft with HoloLens, 3D Printing.” TNW Network
All Stories RSS. N.p., 30 Apr. 2015. Web. 04 May 2015.
Autodesk is linking up with Microsoft, but it still does not have a sound solution to
connect 3D software with 3D printers. This emphasizes the small window of
opportunity Adobe has to make a move regarding Autodesk.
Durden, Tyler. “9 Of The Top 10 Occupations In America Pay An Average Wage Of Less Than
$35,000 A Year.” Zerohedge. N.p., 4 Apr. 2014. Web. 08 May 2015.

55
This article originally discussed the top occupations in the U.S. but it compares these
figures to the average salary in the U.S.
Eadington, William R. Tourism Alternatives: Potentials and Problems in the Development
of Tourism. Philadelphia, PA: U of Pennsylvania, 1992. Print.
This source delves into the necessity of preservation and responsible eco-tourism: an
opportunity for software companies to establish themselves as a global standard.
Elst, Peter. “Adobe Systems: Shantanu Narayen to Step down as CEO.” Change.org. N.p., 2012.
Web. 07 May 2015.
Customers were not happy with the change in Adobe’s business model. This petition
serves an example of the population of Adobe customers and their reactions.
Fortune. “100 Best Companies to Work For.” Fortune. N.p., 05 Mar. 2015. Web. 07 May 2015.
Adobe’s company culture is reflective of its placement on Fortune 500’s Best
Companies to Work for. It has been on this list for 14 years, attracting the best
engineers to create superior software solutions and is a big factor in its competitive
advantage.
Frank, Andrew, Jake Sorofman, and Martin Kihn. “Magic Quadrant for Digital Marketing
Hubs.” Gartner (2014): n. pag. Web. 28 Mar. 2015.
Gartner provided a visual for CMOs to evaluate companies involved in digital
marketing. Adobe is ranked best; the article points out the internal strengths that has
guided Adobe to its rank.
Gartner Research. “Gartner Says Worldwide Software Market Grew 4.8 Percent in 2013.”
Gartner. Gartner, 31 Mar. 2014. Web. 08 May 2015.
Garter explains how much the worldwide software market has grown. Please note that
this source talks about the software market as a whole (where Adobe does not reign
compared to the creative segment).

56
“Global Software & Services.” MarketLine Industry Profile (2014): n. pag. MarketLine. Web. 28
Mar. 2015.
This analysis looks at the global software market. It gives statistics on the industry and
on the leaders within this industry.
“Google Art Project.” Google. N.p., 2011. Web. 4 May 2015.
Google began an initiative in 2011 that archived and brought to the world numerous
art museums. Integrating historic preservation and high-tech companies has begun.
Heeks, Richard. “Using Competitive Advantage Theory to Analyze IT Sectors in Developing
Countries: A Software Industry Case Analysis.” Information Technologies and
International Development 3.3 (2006): n. pag. The Massachusetts Institute of
Technology. Web. 28 Mar. 2015.
This detailed article looks at Porter’s industry analysis, and applies it to IT sectors in
developing countries. It hints toward an opportunity for Adobe: an expanding
international arena.
Hill, Charles W. L., and Gareth R. Jones. Strategic Management: An Integrated Approach.
Mason, OH: South-Western, Cengage Learning, 2013. Print.
This book is the foundation on which I based my paper. Also, chapter 7 served as a
major guide to deciphering the software industry.
Ingraham, Christopher. “There Are More Museums in the U.S. than There Are Starbucks and
McDonalds – Combined.” Washington Post. The Washington Post, 13 June 2014. Web.
04 May 2015.
This article states how many museums there are in the US and gives scope to the size
of a potential new target market for Adobe.
Interbrand. “Adobe - Best Global Brands - Interbrand.” Adobe - Best Global Brands -
Interbrand. Interbrand, 2014. Web. 07 May 2015.

57
Interbrand ranked Adobe 77th on its best global brands list. This is reflective of the
brand image and worth created by Adobe through its strategy, functions, and
management decisions.
Jobs, Steve. “Thoughts on Flash.” Thoughts on Flash. Apple, Apr. 2010. Web. 28 Mar. 2015.
Steve Jobs picks apart Flash Player, condemning its potential and place in the growing
mobile market.
Joss, Molly W. “Adobe’s Latest Step into the Cloud.” The Seybold Report 13.9 (2013): n. pag.
Web. 28 Mar. 2015.
This article is one of the sources used to evaluate the repercussions of Adobe’s switch
to the cloud. It offers both pro and con takes on the switch.
Keyes, Alexa. “The Shrinking Attention Span.” NBC News. N.p., 2014. Web. 04 May 2015.
This article provided information and an appealing visual explaining the consumer
trend of decreasing attention spans. This external trend will be noted as a threat that
needs response.
Klarmann, Alexander. “3D Printing May Have a Larger Impact than the Internet | All3DP.”
All3DP. N.p., 02 May 2015. Web. 04 May 2015.
All About 3D Printing tracks the growth of this new market segment. This article has
useful measurements to evaluate the attractiveness of this new industry.
Knox, Randy H., III. “Case Study: Adobe’s “Greenest Office in America” Sets the Bar for
Corporate Environmentalism.” LEED | U.S. Green Building Council. U.S. Green
Building Council, 2015. Web. 07 May 2015.
This was a recognition awarded to Adobe and is reflective of its stance on corporate
social responsibility. It also shows attributes of Adobe’s long term sustainability plans.
Konrad, Alex. “Marketers Still Have No Idea What They Are Doing In Digital, Adobe Finds.”
Forbes. N.p., 23 Sept. 2013. Web. 28 Mar. 2015.

58
This study has statistics relevant to one of Adobe’s target market. It clearly identifies an
opportunity and threat involving consumers: digital illiteracy.
Lemos, Robert. “Network Defenders Have About a Week to Patch Flaw, Study Finds.” EWeek
QuinStreet Inc. (n.d.): n. pag. Edbscohost. Web. 5 Dec. 2014.
This study provides statistics revolving around the nature of hacking and patches. It
also warns users about the true risk one takes when downloading a software
application.
Mars, Roman. “Episode 149: Of Mice and Men.” 99 Percent Invisible. KALW American
Institute of Architects in San Francisco. San Francisco, California, 20 Jan. 2015. Web. 8
May 2015. Transcript.
This episode delves into the origin of the consumer trend of usability learnability. The
standard models used today revolve around entrepreneurs’ (like Steve Jobs) insight to
what will be adopted the fastest by the masses.
Marshall, Gary. “The 10 Most Hated Programs of All Time.” TechRadar. N.p., 2012. Web. 07
May 2015.
Some of Adobe’s products are the most hated on the internet. Granted this may be
due to internet trolls reporting and nagging, like they do best, however
it is bad publicity and rankings that Adobe could address. It could take this
weakness as an opportunity to increase customer relationships and make a show of
Adobe’s responsiveness.
McAfee Research Team. “The Economic Impact of Cybercrime and Cyber Espionage.” THE
ECONOMIC IMPACT OF CYBERCRIME AND CYBER ESPIONAGE (n.d.): n. pag.
McAfee. Center for Strategic and International Studies, July 2013. Web. 8 May 2015.
This article delves into the financial, political, and reputation damage of cybercrime.
It provides extremely rough estimates to the economic damage done by things like

59
piracy and pilferage.
Narayen, Shantanu. “”If There Is Change, Be Clear about the Metrics”” Interview. Business
Today. N.p., May 2015. Web.
CEO Shantanu Narayen offers his views on bold decisions, company integration, and
industry trends.
McCue, TJ. “Cloud Computing: United States Businesses Will Spend $13 Billion on It.” Forbes.
Forbes Magazine, 29 Jan. 2014. Web. 08 May 2015.
Spending on cloud computing is going up, especially in businesses. Owning cloud
farms or running applications on the cloud are extremely attractive segments
with which to be involved.
NASDAQ. “Autodesk, Inc. (ADSK) Analyst Research.” NASDAQ.com. NASDAQ, 2015. Web.
06 May 2015.
Analysts’ predictions on the performance of Autodesk provided insight to the window
of opportunity Adobe could take to acquire the business. It also confirms Autodesk is a
promising investment.
Niccolai, James. “Forever 21 Denies Pirating Adobe Software, Strikes Back.” PCWorld. IDG
News Service, 16 Apr. 2015. Web. 08 May 2015.
This is a news article regarding the intellectual property lawsuit between Forever 21
and Adobe. It is being taken to court. The outcome of this case will have
major repercussions on both companies. Forever 21 is accused of pirating Adobe’s
software, but Forever 21 is firing back with claims of unfair business practices
by Adobe to settle this outside the courts.
Patexia. “Patent Search.” Patent Search. N.p., n.d. Web. 07 May 2015.
This source offered a simulator in which one can select corporations to compare the
number of patents it has collected / created since 2002.

60
Porter, Michael E. “Understanding Industry Structure.” Harvard Business School (2007): 1-16.
Web. 8 May 2015.
Porter uses competitors in the software industry as an example of companies using
benefits of scale.
Ramos, Laura, Tracy Stokes, Ryan Skinner, and Elizabeth Perez. “Compare Your B2B Content
Marketing Maturity.” Forrester (2014): n. pag. Web.
This report provides statistics that marketers really do not know how to interpret big
data. It also shows the lack of strategy when it comes to content marketing.
Ritz, John M. “A Focus on Technological Literacy in Higher Education.” Virginia Tech. The
Journal of Technology Studies, Spring 2013. Web. 07 May 2015.
This article highlights the need for technological literacy, pushing for tech-literacy to
be measured along with traditional literacy. Tech-literacy is, in short, necessary.
Roe, David. “SaaS Growth Is Triple Enterprise IT Average, Driven by CRM, Mobile
Deployments.” CMSWire.com. N.p., 13 Aug. 2013. Web. 08 May 2015.
This forecast predicts increases in SaaS demand for at least another three years. It also
provided a concise report of today’s SaaS applications that was used to further
understand the business of Adobe.
Rothwell, Jonathan. “Short on STEM Talent.” US News. U.S.News & World Report, 15 Sept.
2014. Web. 08 May 2015.
The demand for persons trained in the STEM fields out paces the supply. This makes
those individuals rare and able to demand that much more in compensation.
Sawers, Paul. “Mattel Taps Autodesk to Let Kids Design and 3D Print Their Own toys.”
VentureBeat. N.p., 20 Apr. 2015. Web. 04 May 2015.
Autodesk is branching out to another demographic, of which Adobe has very little
grasp. This is a huge threat that could turn into an opportunity if Adobe were

61
to acquire Autodesk.
Schadler, Ted. “The Forrester Wave: Web Content Management Systems, Q1 2015.” Forrester
(2015): n. pag. Web. 28 Mar. 2015.
Forrester published a report that placed Adobe as the strongest company with regards
to current offering and strategy in the digital experience realm.
Shankland, Stephen. “Survey: Creative Suite Users Loathe Adobe’s Subscriptions - CNET.”
CNET. N.p., 28 May 2013. Web. 04 May 2015.
This survey provides insight to customer reactions to Adobe’s recent shift to the cloud-
based subscription model. Reactions are negative.
Technavio Analysts. “Adobe Systems, HP and Oracle Top TechNavio’s List of Key Vendors
in the Global SQM and CEM Market.” Adobe Systems, HP and Oracle Top TechNavio’s
List of Key Vendors in the Global SQM and CEM Market. Technavio, 26 Feb. 2015.
Web. 07 May 2015.
Even though Adobe is dwarfed in size by software companies Oracle, HP, and IBM, it
is recognized to have superior capabilities and execution of strategy.
“The 2015 Web Globalization Report Card.” The 2014 Web Globalization Report Card.
Bytelevel Research, 2015. Web. 04 May 2015.
This is one of the accolades Adobe received that is the result of Adobe applying distinct
competencies to create competitive advantage revolving around quality and
innovation.
Trefis Team. “Adobe’s Creative Software Market Share Will Continue to Be Volatile -- Trefis.”
Trefis. N.p., 2011. Web. 04 May 2015.
This site explicitly stated Adobe’s market share and forecasted Adobe’s future market
share as volatile.
U.S. Chamber of Commerce Foundation. “The Millennial Generation Research Review.” U.S.

62
Chamber of Commerce Foundation. N.p., 2015. Web. 7 May 2015.
This government source provides some statistics and trends on millennials in the U.S.:
a generation that is about to take Adobe by storm as the next wave of marketers,
engineers, and creatives.
U.S. News. “Software Developer: Salary.” Software Developer Salary Information. US & World
News: Money, 2015. Web. 08 May 2015.
This shows about how much a software developer costs. This information is used to
decipher how much power suppliers have in the software industry.
Webb, John. “How Many Startups Are There?” N.p., 11 Feb. 2014. Web. 04 May 2015.
This source provides statistics on a potential market opportunity, including size and
type of the market of new businesses.
Wolonick, Josh. “Where Is the Booming App Market Going?” USA Today. Gannett, 07 Mar.
2013. Web. 28 Mar. 2015.
This article raises questions regarding the future of applications, highlighting potential
opportunities / threats for a corporation like Adobe.

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Nakagawa 2015